The Efficient Market Hypothesis Applies to

question 43

Multiple Choice

The efficient market hypothesis applies to

• A) both the stock market and the foreign exchange market.
• B) the stock market but not the foreign exchange market.
• C) the foreign exchange market but not the stock market.
• D) neither the stock market nor the foreign exchange market.

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Definitions:

Legal Capital

The minimum amount of capital that a company must maintain as required by law, often to protect creditors.

Dividend Rate

The total dividends declared by a company over a period, usually a year, divided by the number of outstanding shares.

Preferred Shares

A class of ownership in a corporation with a fixed dividend that has priority over common stock dividends.

Participating

In finance, it often refers to securities or investments that have the potential to share in additional earnings or payouts beyond a predetermined amount.